The Costs of Marijuana Legalization

When state lawmakers consider legalizing marijuana, one of the first arguments they make is that the legalization of the drug will bring in tax revenue. Missing from that argument is the reality that the legalization and commercialization of marijuana has real societal costs associated with it that cannot be overlooked.

Smart Approaches to Marijuana (SAM) has put together cost studies in a handful of states that have considered legalization to show how these societal costs far outweigh projected marijuana tax revenues.

A first-of-its-kind study analyzing costs of marijuana legalization on the state’s law enforcement and emergency services agencies and local governments conducted by SAM New York and the New York State Sheriff’s Association found that a huge percentage of New York’s estimated revenue from legal pot sales would need to be directed toward costs associated with law enforcement and protecting public safety. The report shows upwards of $235 million in potential expenses in the first year alone, more than two-thirds of the state’s expected marijuana tax revenue for the first three years.

Even conservative cost estimates show that marijuana legalization would cost Rhode Island approximately $61.2 million in 2020, over 25 percent above the $48.3 million pro-legalization activists have projected. (Even without considering such costs, those projected revenues would account for just one-half of one percent of the Governor’s proposed FY2018 budget of $9.2 billion.

In conjunction with the Connecticut chapter of SAM (CT-SAM), SAM released a comprehensive report on the projected costs of legalization in Connecticut — finding that legalization would cost the state $216 million, far outweighing even the rosiest tax projections.

In 2018, we found that legalization would cost the state of Illinois $670.5 million, far outweighing estimated tax revenue projections of approximately $566 million.

Finally, the Centennial Institute at Colorado Christian University conducted a comprehensive study that found that for every dollar gained in tax revenue, Coloradans spent approximately $4.50 to mitigate the effects of legalization.